TELUS Corp (NYSE:TU) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Dividend Growth Model
Maher Yaghi – Desjardins Securities: When you are looking at your cash flow management and your upcoming dividend increases and buybacks that you announced this morning, are you staying within the 1.7 – the 1.5 to 2 times in terms of net debt to EBITDA ratio that you have mentioned in the past, are you being comfortable in, when you look out into 2016?
Darren Entwistle – President and CEO: So the answer to that question is yes and I can tell you that in addition to that we have also calibrated our dividend growth model within our 65% to 75% payout ratio range and you should expect us to view the midpoint of that range as the equilibrium that we would strive for.
Maher Yaghi – Desjardins Securities: I calculated previously about $9.50 in terms of cash that you are expecting to return to shareholders over the next four years, what are your thoughts about the use of cash in terms of investment investing opportunities and in Canada apart from the upcoming spectrum auction and your regular spending capital, do you see any leeway? You’re leaving enough leeway that you can make potential acquisitions if they come up in front of you?
Darren Entwistle – President and CEO: So the answer to that question is also, yes. I think, we have the ability given the strength of our balance sheet. The strength of our cash flow and the strength of our earnings on a multi-period basis, to both participate in a fulsome fashion in the two upcoming spectrum auctions, as well as make the organic investments in our business necessary and to complement that through successive NCIB programs and our dividend growth model, all respecting both our credit ratios from a net debt to EBITDA perspective, as well as the dividend payout ratio range that I’ve articulated. In terms of where we’re going to spend our money, I don’t think there’s been any more predictable organization than TELUS over the past 13 years. We’re going to spend our money on broadband technology, on wireless and wireline. On the wireless front, we’re doing that as we speak with our LTE deployment. On the wireline front, we’re going to push fiber deeper into the access layer of our network, to support our TV product, our high-speed product and also the back hauling of wireless traffic as a result of our small cell deployments. We think that’s the right thing to do. There are some complementary areas to that, that we think make good sense such as the investments that we’ve made in our two new intelligent Internet data centers to support our ambitions in respect of cloud computing, across both wireline and wireless that I think are sanguine investments for us. But Canada is our focus. Broadband is the key enabler for this organization that’s delivered the revenue result, the operating earnings results, the EPS results and the cash flow results, and when we harvest our investments, what do we do, we take a portion of it and we plough it back into the servitude of the strategy so that we can continue with our global leadership and then we take a portion and we return it to shareholders through things like our dividend growth model and NCIB, and I don’t think there are very many organizations globally, where investing for the future and returning significant amounts of cash to shareholders are mutually inclusive, but that’s the case at TELUS.
Greg MacDonald – Macquarie Capital: Question goes to either Darren or John. It’s really more definitional on the cash distribution announcements today. Just do bear with me, I have just three short ones. One, can we assume that two times per year, 5% each dividend bumps is the plan to continue through ’14 through ’16?
Darren Entwistle – President and CEO: We’re going to go forward with two increases per year. So, you can do the math on the circa 10% annually. We used the word circa judiciously. I would remind you that our dividend increased at $0.34 that we just announced. It represents a year-over-year growth rate of 11.5%, but we’re going to park in the 10% neighborhood and so you can do the compounding impact in terms of that happening on a twice per year basis.
Greg MacDonald – Macquarie Capital: Darren, just a quick follow-up. One the buyback itself, will that be a discretionary buyback? In other words, will you have quiet periods and be opportunistic within the quarter on that or will you actually have a consistent daily purchase program?
Darren Entwistle – President and CEO: I will let John speak to that and then I will close it out if he gets it wrong.
John Gossling – EVP and CFO: So Greg there is developments of what you have mentioned. There is various ways we can do the buyback. There are private market transactions. There are automatic programs that you mentioned that can help us to stay away from blackout periods and then there were opportunistic purchases that we can make. So we are looking at a mix of all of those and I think depending on what’s happening in the market we will drive our strategy on what the mix is exactly. But we are certainly committed to this program and getting it done this year.
Greg MacDonald – Macquarie Capital: Then finally I actually take a bit of a different view from Maher. I am wondering, if you had opportunities whereby you had excess cash and clearly you have made a balanced approach to where you spend that cash, I don’t think anyone would argue that you are under-spending on CapEx. If you had excess cash down the road for whatever reason is the $500 million firm or will you stick with look we are going to share cash to the extent that we get it with shareholders and of that means if we reap some sort of outsized return down the road that $500 million could grow a little bit.
Darren Entwistle – President and CEO: Discretionary in nature I don’t think we have ever been accused of under spending on CapEx before but I point to that as a significant milestone now for our organization. But we are clearly in a situation where the sources of cash are chronically exceeding the uses and if that delta gets exacerbated then I think investors know our mindset is to return surplus cash to them. We think that’s the right thing to do and you can count on that behavior on a prospective basis.